G20: Secure Future Value to Build Wealth Today

Guidance to ministers & heads of state

The task: G20 leaders gathered in Buenos Aires will make decisions that influence 80% of global economic output. At the COP24 in Katowice, ministers and negotiators from 195 nations will have an opportunity to shape the future of climate-related finance. These global negotiations put leaders and ministers in position to effectively shape the quality of lived experience for everyone, for generations to come.

Unsustainability is a systemic risk, now being built into every aspect of the global economy. Everyday activity is eroding resilience and accelerating vulnerability. We need to move policy at all levels toward an operational standard founded on detailed, interactive resilience intelligence. That means asking (and answering) these questions:

Due to the calendar laid out by the Paris Agreement and related processes, this year’s G20 Summit and annual UN Climate Change talks are positioned to build more future value than any previous gatherings of government leaders. Five points of context:

The IPCC has produced the scientific report required by the Paris Agreement to outline the cost of failing to keep global temperature rise to 1.5ºC.

Negotiations to formulate the Paris Rulebook are defining terminology around which sustainable investments will be designed and valued.

The 3rd Biennial High-Level Ministerial Dialogue on Climate Finance (to be held during the COP24) is positioned to catalyze record amounts of climate-related finance and investment—if it can motivate ministerial decision-making to seek and to act on economy-wide resilience intelligence.

The Talanoa Dialogue allows all 196 parties to the UN Climate Convention to share knowledge and experience to empower each other to accelerate national (and so collective) climate action.

Integration of Earth science data into mainstream finance will make visible vast gains and losses we could not see before, changing the basic arithmetic of markets and unleashing wealth leaders can leverage. The Climate Intelligence Delta—the difference between investing to keep warming below 1.5ºC versus investing less efficiently and effectively—is worth an estimated $20 trillion in the next 20 years.

This is starting to become apparent to the banking sector and to central banks, as climate-related financial risk disclosure advances.

Insurers have described a world that does not meet Paris Agreement goals as “uninsurable.”

A world that is uninsurable is also ineligible for virtually any kind of mainstream finance.

Actions that build resilience—and move us toward a future in which warming is limited to 1.5ºC or less—will pay dividends on multiple levels. Low carbon transport investment, for instance:

protects air quality,

prevents human health risks, and

mitigates future climate threats, while also

capturing (and compounding) the hard-dollar gains that accrue to such investments,

Economy-wide resilience intelligence is the process of studying and valuing those hidden areas of additional value.

As public-sector and private-sector financial leaders learn to work with and to leverage economy-wide resilience intelligence, they will be better positioned to capture future returns on investment, both direct returns and external returns.

For leaders of nation states, this added efficiency is an emerging imperative.

Economic development, food and water supplies, fiscal resilience, national security, and human-scale quality of life measures, cannot be optimally advanced without interactive, evolving macrocritical resilience insights.

On the table at this year’s G20 Summit is the question of whether nation-state leaders will succeed in leveraging external returns on investment (XROI) to build future value into their everyday economic and political reality. This is a real opportunity, in a way it has not been before.

To secure future wealth, leaders will have to commit to track and understand non-market global drivers of their own chances of success.

For any given leader, failure to consider economy-shaping resilience-related insights will ensure their nation is subject to added future cost and risk.

That added future cost and risk will lead to lower overall probability of sustainable return on investment in any area.

Security, prosperity and competitiveness have already been redefined by our industrial interaction with natural systems—undercutting the foundational non-market contributions they make to our overall wellbeing. The IPCC’s Special Report on the 1.5ºC global warming limit and the 4th US National Climate Assessment make this clear.

The 2018-2020 period will effectively decide how much of global wealth is climate-smart and how much is burdened by the pervasive hidden costs of not leveraging resilience intelligence.

Money that is left to labor without such enhanced value-building capability effectively rules out vast amounts of future opportunity.

That opportunity cost is rapidly coming into view, and by 2020 will be more routinely quantifiable in hard dollar terms.

The late United States senator John McCain wrote that “Human rights exist above the state and beyond history.” The science of the global sustainability challenge exists independent of the politics of any nation or office-holder. No sector can do better without a serious transition to climate-smart practices.

The G20 and COP24 must take action to ensure the everyday economy leverages non-market drivers of value to secure future wealth. To achieve this, leaders should demand the following accelerators of future value are part of their portfolio:

A note on the featured image at the top of this page, taken at Beartooth Pass in Montana — Mountain glaciers are stores of fresh water that release that water gradually and reliably, feeding the downstream water cycle. Investing to keep non-market value secure for the future helps to ensure today’s investments have maximum leverage. Resilience intelligence is the work of finding out how well we do this.